A closing for a real estate transaction is considered to be the final step in the transaction where the property is transferred from one party to another or where an interest in the property is transferred from one party to another. Additionally, the closing may also include situations where an individual is refinancing a loan on a particular real estate property. In any type of real estate closing, many individuals are involved and countless documents and payments exchange hands in order to complete a transfer from one party to another party. During the closing, many individuals may be present for several different purposes including, for example, buyers, sellers, lenders, loan officers, brokers, title companies, insurance companies, agents, closers, attorneys, or representatives for any party. For example, a title company or title insurance company may have an agent or closer at the closing representing the title company's or the title insurance company's interest in the transaction.
Many documents and payments are involved in a real estate closing, depending on the type of transfer in interest involved. Of the documents required, many must be obtained prior to the closing, and some must be recorded subsequent to the closing with the appropriate recording institution. The parties involved in the transaction prepare in advance, in many cases with each other, to obtain the necessary documents and payments due for the closing.
Additionally, upon closing, several payments may be due to various parties, for example, lenders, lien holders, and municipalities. Some of the information and documents required are readily available for the necessary party and are easily and quickly obtainable. For example, some records are easily accessible online at a particular party's website, or may be quickly accessed via email or fax. However, many of the documents require physical appearances, for example at an office, or written requests to obtain documents which can take time, effort, and could be costly. Additionally or alternatively, it may be necessary for documents to be recorded with the proper recording institutions prior to the closing, during the closing, and subsequent to the closing. In particular, when payments are due, the delay in time and exchange of multiple hands before arriving at the final destination may prove costly in delayed payments due to additional interest fees associated with the interest for the amount of time it takes for the payment to ultimately be delivered to the party and delayed payment fees.
The traditional method of recording a document in the state and/or county clerk's records involved a very lengthy process involving funds exchanging multiple hands and funneling through various accounts, beginning with the initial release from the funding source to its ultimate destination, for example, a municipality. In many scenarios, the funds that are required to be paid, for example to a municipality or other appropriate designation, are entrusted to a party at the closing, for example to a title closer representing the title company or title insurance company, as a check made payable to that party, the title company, or the title insurance company.
In the traditional method, upon receiving the funds at the closing, the title company begins a lengthy process which takes time, adds unnecessary costs, may be prone to errors, and has the potential for fraud. For example, if any errors, such as typographical errors, are present on documents that must be recorded with the appropriate recording institutions, for example and without limitation, the state and/or county clerk, the recording will be rejected and the payment will not be accepted at that time. Thus, in this scenario, the title company or title insurance company must obtain the documentation again, without the errors, which takes additional time to complete, and the documents do not get recorded with the appropriate recording institution until the corrected documents are obtained.
The title company deposits all respective monies into a clearing account, for the purpose of ultimately transferring the funds to the appropriate destination or designated parties. The clearing account is a temporary account containing the costs or amounts that are due to be transferred to another account where the payments are due, established for the purpose of paying the amounts due to the designated parties. The appropriate destination, and/or designated parties, could include any number of destinations including any municipalities, the New York City Department of Finance, the New York State Department of Taxation and Finance, municipalities associated with a state, county, city, town, or village, including but not limited to the Department of Taxation and Finance, receiver of taxes, traffic department, violations bureau, water department, sewer department, building department, housing preservation department, highway department, etc. The title company may then transfer the funds from the clearing account to the appropriate individual destination accounts, process the documents with cover sheets, issue checks in the amount of the taxes made payable to each department or designated party, send the documents out to the designated party, municipality, and/or appropriate recording institution, where the funds are finally deposited into the designated party accounts, municipality accounts, and/or recording institution accounts, and the documents are officially recorded with the appropriate recording institution.
The traditional method is an inefficient means for achieving the ultimate goals of both validating, securing ownership and/or lien position, and paying the appropriate taxes due to the appropriate county and/or state, paying the appropriate fees due to the designated parties, and/or recording appropriate documents with the appropriate recording institution. Additionally, the traditional method may also impose unnecessary liability on particular parties for example, by the funds unnecessarily exchanging multiple hands before arriving at the final destination. Further, under the traditional method, there is a large delay in time from the moment of the closing and the point at which the designated parties receive the payments due to them which can be a natural delay or which can be caused by a number of factors. For example, there could be a miscalculation of taxes due to a particular municipality, a delay in delivery time between the title closer and title company or title insurance company, bank attorney or an agent of the bank misusage of the funds, for example by means of theft or fraud, leading to insufficient funding which causes the title company checks to bounce, personnel error within the title company or the title insurance company, or any other party to the transaction, in processing documents and/or funds, misusage of funds within the title company, title insurance company, or any other party, for example by means of theft and/or fraud, title company or title insurance company and borrower conspiring to hold back a mortgage from being recorded, for example, by keeping the mortgage tax and causing the lender to have an unsecured lien, title company or title insurance company personnel delay in processing and delivering documents, title company or title insurance company personnel error in processing document and funds, causing the municipality to reject the documents and the funds.
Thus, there exists a need for a payment and certification of payment method and system for delivering funds to designated parties and receiving a certification of the funds delivered for recording documents with appropriate recording institutions. In particular, there exists a need for a payment method and system for paying fees due to municipalities during a real estate closing transaction and a method and system for providing a certification of the payments made for recording with the appropriate recording institutions, i.e. the county clerk. Additionally, or alternatively, there exists a need for alerting a municipality, and/or other interested parties, that a transaction has taken place, thus eliminating the possibility of fraudulent activities and multiple transactions taking place at once.